Growth Stocks
Although growth stock picks can be highly volatile, they can make good long-term investments. They may be well-known stars or quiet gems, but they do share one common attribute—they are growing at a higher-than-average rate within their industry, or within the market as a whole, and could keep growing for years or decades.
And keep in mind that we focus on growth stocks, which have a good long-term history and favourable prospects. We downplay momentum stocks that tend to attract many investors simply because they are moving faster than the market averages, but are liable to fall sharply when their momentum fades.
There’s room for growth stock investing in your portfolio, but make sure you follow our TSI Network three-part Successful Investor strategy for your overall portfolio:
- Invest mainly in well-established companies;
- Spread your money out across most if not all of the five main economic sectors (Manufacturing & Industry; Resources & Commodities; Consumer; Finance; Utilities);
- Downplay or avoid stocks in the broker/media limelight.
Make better stock picks when you read this FREE Special Report, Canadian Growth Stocks: WestJet Stock, RioCan Stock and More.
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Growth Stocks Library Archives
COMPUTER MODELLING GROUP $15.32 (Toronto symbol CMG; TSINetwork Rating: Speculative) (403- 531-1300; www.cmgroup.com; Shares outstanding: 37.8 million; Market cap: $579.1 million; Dividend yield: 2.9%) reports that its revenue fell 10.1% in the three months ended September 30, 2011, to $12.0 million from $13.3 million a year earlier. Licence revenue rose to $10.9 million from $10.8 million, but that was offset by a 57.0% drop in consulting and professional-services revenue, to $1.1 million from $2.5 million. The company consulted on a few large, one-time projects a year ago. Earnings per share fell 7.7%, to $0.12 from $0.13. Already a leader in complex heavy-oil and oil-sands simulations, Computer Modelling should profit as oil and gas producers continue to develop other unconventional sources, such as shale gas....
BIRCHCLIFF ENERGY $13.24 (Toronto symbol BIR; TSINetwork Rating: Speculative) (403-261-6401; www.birchcliffenergy.com; Units outstanding: 131.4 million; Market cap: $1.7 billion; No dividends paid) develops, produces and explores for oil and natural gas, mainly in the Peace River Arch area near the Alberta/B.C. border. About 75% of Birchcliff’s production is natural gas. The remaining 25% is oil. In the three months ended September 30, 2011, Birchcliff’s production jumped 34.6%, to 17,648 barrels of oil equivalent per day (including natural gas) from 13,109 barrels a year earlier. Cash flow per share rose 50.0%, to $0.27 from $0.18. The production increase and higher oil prices were the main reasons for the gain....
IMPERIAL METALS $12.30 (Toronto symbol III; TSINetwork Rating: Speculative) (604-669-8959; www.imperialmetals.com; Shares outstanding: 74.9 million; Market cap: $921.3 million) has split its shares on a two-for-one basis. That should make the shares more liquid and help the company attract more investors. Meanwhile, Imperial’s cash flow per share rose 17.8% in the nine months ended September 30, 2011, to $0.86 from $0.73 (adjusted for the two-for-one split). The company aims to use the cash flow from its Mount Polley and Huckleberry mines in B.C. to build a mine at its Red Chris copper/gold property in northwestern B.C....
ALIMENTATION COUCHE-TARD $30.76 (Toronto symbol ATD.B: TSINetwork Rating: Extra Risk) (1-800-361-2612; www.couche-tard.com; Shares outstanding: 242.4 million; Market cap: $7.5 billion; Dividend yield: 1.0%) is the largest convenience-store operator in Canada, with over 2,000 outlets. It also has over 3,900 U.S. stores. The Canadian stores operate under the Couche-Tard and Mac’s banners, while the U.S. stores mainly use the Circle K brand. Couche-Tard sells fuel at over 68% of its stores. In the quarter ended October 9, 2011, Couche-Tard’s earnings per share rose 6.9%, to $0.62 from $0.58 a year earlier (all figures except share price and market cap in U.S. dollars). Sales rose 24.1%, to $5.2 billion from $4.1 billion. The gains came from higher fuel prices, the stronger Canadian dollar and higher merchandise sales. The company gets 30% of its sales by selling merchandise....
LEON’S FURNITURE LTD. $12.53 (Toronto symbol LNF; TSINetwork Rating: Average) (416-243-7880; www.leons.ca; Shares outstanding: 72.3 million; Market cap: $905.9 million; Dividend yield: 3.2%) saw its sales fall 4.3% in the latest quarter, to $174.4 million from $182.1 million a year earlier. Weaker consumer spending and a drop in new-housing starts held back sales. Earnings per share fell 4.0%, to $0.24 from $0.25. Leon’s plans to speed up its expansion by opening roughly five new stores a year over the next five years. It is also renovating many of its existing stores....
CAMECO CORP. $17.79 (Toronto symbol CCO; TSINetwork Rating: Extra Risk) (306-956-6200; www.cameco.com; Shares outstanding: 390.0 million; Market cap: $6.9 billion; Dividend yield 2.3%) has dropped its hostile takeover bid for Hathor Exploration (symbol HAT on Toronto). However, Cameco could still profit from Hathor’s uranium properties (see below). Hathor’s main exploration properties, including its Midwest Northeast property, are on the east side of the Athabasca Basin. This region contains all of Canada’s producing uranium mines and accounts for 23% of global production. Cameco holds cash of $1.2 billion, or $3.30 a share, so it can afford to make acquisitions that enhance its growth prospects. However, it dropped its Hathor bid because it felt the price had risen too high....
EUROPEAN GOLDFIELDS $12.16 (Toronto symbol EGU; TSINetwork Rating: Speculative) (44 (20) 7408 9534; www.egoldfields.com; Shares outstanding: 183.8 million; Market cap: $2.2 billion; No dividends paid) is up over 20% since early December. The rise came after the company confirmed that unnamed potential buyers have approached it about a takeover. Eldorado Gold, symbol ELD on Toronto, and Centerra Gold, symbol CG on Toronto, are rumoured to be interested parties. We’ve said for some time that European Goldfields could become a takeover target as its new mines move toward production. That’s even more of a possibility now, after its recent financing deal with Qatar Holdings LLC, a division of Qatar’s sovereign wealth fund, to develop its mines in Greece and Romania. These mines should let the company produce around 400,000 ounces of gold a year by 2014....
TOROMONT INDUSTRIES LTD. $20.01 (Toronto symbol TIH; TSINetwork Rating: Extra Risk) (416-667-5511; www.toromont.com; Shares outstanding: 77.2 million; Market cap: $1.5 billion; Dividend yield: 2.2%) distributes a broad range of industrial equipment, including machinery made by Caterpillar Inc. Toromont also makes refrigeration systems through its CIMCO division. In July 2011, Toromont completed the spinoff of Enerflex Ltd.. Shareholders received shares of the new Toromont and shares of Enerflex. That company leases and sells equipment and services for natural gas production, including field production plants and compression and processing plants. In the three months ended September 30, 2011, higher equipment sales and rentals pushed up Toromont’s revenue by 9.3%, to $367.3 million from $336.0 million a year earlier. Without one-time items, earnings per share rose 33.3% to $0.40 from $0.30, on the higher revenue and improved profit margins....
INTERNATIONAL BUSINESS MACHINES CORP., $194.56, New York symbol IBM, continues to expand its software business. This week, it agreed to buy DemandTec Inc. (Nasdaq symbol DMAN), which makes software that retailers and makers of consumer products use to analyze their customers’ spending habits. This information helps them predict consumer behaviour and quickly adjust their prices. Adding DemandTec will also enhance IBM’s expertise in fast-growing area of cloud computing. IBM will pay $440 million for DemandTec when the sale closes in the first quarter of 2012. The company earned $3.8 billion, or $3.19 a share, in the three months ended September 30, 2011, so it can easily afford this purchase....
EUROPEAN GOLDFIELDS, $12.86, symbol EGU on Toronto, is up almost 29% this week. The rise came after the company confirmed that an unnamed potential buyer has approached it about a takeover offer. Eldorado Gold, symbol ELD on Toronto, is rumoured to be the interested party. European Goldfields’ Skouries and Olympias gold projects in Greece and its Certej project in Romania would be good fits for Eldorado, which already has mines in Greece and Turkey. We’ve said for some time that European Goldfields could become a takeover target as its new mines move toward production. That’s even more of a possibility now, after its recent financing deal with Qatar Holdings LLC, a division of Qatar’s sovereign wealth fund, to develop its mines....